Premium Support Amendment Scheme 2007
 
I, ANTHONY JOHN ABBOTT, Minister for Health and Ageing, formulate this Scheme under subsection 43 (1) of the Medical Indemnity Act 2002.
Dated 21/6/2007
 
Tony Abbott
Minister for Health and Ageing
 
 
 
Contents
 
Part 1                   Preliminary                                                                                           3
1.           Name of Scheme [Note 1]                                                                        3
2.           Commencement                                                                                      3
3.           Amendment of the Premium Support Scheme 2004                                    3
Schedule - Amendments                                                                                                   4
 
 
Part 1        Preliminary
1.      Name of Scheme [Note 1]
This Scheme is the Premium Support Amendment Scheme 2007.
2.      Commencement
This Scheme commences on 1 July 2007.
3.      Amendment of the Premium Support Scheme 2004
The Schedule amends the Premium Support Scheme 2004.
Schedule - Amendments
[1]           Subsection 12 (1)
Delete the subsection, substitute
(1)     Subject to this section, the following categories of members are eligible members for a premium period:
(a)     a member whose gross indemnity costs for a premium period exceed 7.5% of the member’s actual income or, where a calculation is being made as to the amount of an advance subsidy, 7.5% of the member’s estimated income; or
(b)     a procedural general practitioner practising in a rural area; or
(c)      a member with a MISS entitlement.
[2]           Subsection 12 (3)
Delete the subsection, insert
(3)     A member whose practice is primarily based on public billings or services, but who during a premium period:
(a)     obtains medical indemnity cover for private medical practice for which income is received; and
(b)     is not indemnified under a right to private practice agreement,
          is not an eligible member in respect of his or her private medical practice unless the member's actual income generated from that practice exceeds $1,000 for the whole of the premium period.
(4)     A member who does not receive any income from private medical practice during a premium period:
(a)     is not an eligible member unless subsection (5) applies; and
(b)     if subsection (5) applies, is taken to be an eligible member for the purpose of paragraph (1) (a).
(5)     A member who practises as a medical practitioner only in the public sector during a premium period (and thereby earns no income from private medical practice) is an eligible member for that premium period if the member's contract of insurance with the contractor provides run-off cover, retroactive cover or both for incidents that occurred in the course of, or in connection with, the practitioner's private medical practice at a time when he or she was deriving income from practising as a medical practitioner.
(6)     For the avoidance of doubt, a member who practises as a medical practitioner only in the public sector during a premium period (and thereby earns no income from private practice) is not an eligible member for that premium period if the only contract, or contracts, of insurance he or she holds with the contractor provides medical indemnity cover only for medico-legal costs or damages in respect of gratuitous services or both of those types of cover.
(7)     If a member has medical indemnity cover provided by an insurer in compliance with section 26A of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003, the member is not an eligible member for the period during which that cover is in effect.
(8)     If a contractor makes a compulsory offer to a member of medical indemnity cover in compliance with section 23 of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 and at the time that cover, if accepted, takes effect:
(a)     the member had held medical indemnity cover with that contractor, or its associated MDO, on a continuous basis for the previous 10 or more years; and
(b)     the contractor provides the cover required to be offered by that Act at a cost to the member of no more than $50 (exclusive of taxes and charges),
the member is not an eligible member for any period that the cover is in effect.
[3]           Paragraph 13 (1) (g)
Delete paragraph, substitute
(g)     if the member's application for the contract of insurance, or application for renewal of a contract of insurance, as the case may be, required the member to do any of the following:
(i)      participate in a risk-management program, risk-management training or risk-management activities;
(ii)      provide to the contractor information regarding such participation,
the member must have complied with that requirement in the premium period, whether or not the requirement forms part of the member's contract of insurance arising from the application.
[4]           Section 14
Delete the section, insert
(1)     For an eligible member referred to in paragraph 12 (1) (a), the PSS calculation is 80% of the amount by which the member’s gross indemnity costs exceed the base amount.
(2)     Base amount means:
(a)     for a calculation of subsidy under Part 5, 7.5% of the eligible member’s estimated income; or
(b)     for a calculation of subsidy under Part 6, 7.5% of the eligible member’s actual income.
(3)     For a member referred to in subsection 12 (5), the base amount in subsection (1) is zero and the PSS calculation is 80% of the member’s gross indemnity costs.
[5]           Paragraph 15 (1) (b)
Delete the paragraph, substitute
(b)     the amount of the lowest base premium for a non-procedural general practitioner in the same income band, practising in the same State, and who has medical indemnity cover with the same contracted insurer.
[6]           Note under subsection 15 (1)
The note is omitted and substituted with
Note   'Lowest base premium' and ‘State’ are defined in section 52.
[7]           Section 16
Delete the section
[8]           Paragraphs 18 (2) (c) and (d)
Omit the paragraphs, insert
(c)     for a member with a MISS entitlement, the amount calculated using the MISS calculation.
[9]           Subsection 18 (3)
Delete the subsection, substitute
(3)     If during the whole or part of a premium period, a member is an eligible member in more than one category mentioned in subsection (2), the amount of subsidy calculated for that member for the premium period or part of the period is, unless section 22 applies, the higher of the amounts calculated for each of the categories applying to the member at that time.
[10]         Subsection  19 (2)
Omit
, other than a special category member,
[11]         Section 21
Delete the section
[12]         Section 22
Delete the heading and section, substitute
Calculation for certain members where actual income not provided
If a member with a MISS entitlement or a rural procedural general practitioner does not provide to the contractor his or her estimated income or a statutory declaration as to his or her actual income for the premium period as required by the contractor, the amount of subsidy payable on behalf of that member for that premium period is calculated using:
(a)     for a member with a MISS entitlement, the MISS calculation; or
(b)     for a rural procedural general practitioner, the rural calculation,
notwithstanding that the member may have been entitled to a higher amount of subsidy under one of the other calculations.
[13]         Paragraph 24 (1) (m)
Insert under paragraph 24 (1) (m)
Note   The operation of this subsection is qualified in respect of offers to provide medical indemnity cover to a member on or after 1 January 2008 - see section 25A.
[14]         Subsection 25 (3)
Insert under subsection 25 (3)
Note   The operation of this section is qualified in respect of offers to provide medical indemnity cover to a member on or after 1 January 2008 - see section 25A.
[15]         Subsection 25 (4)
Delete the subsection
[16]         After section 25
Insert
25A  Limitation of gross indemnity costs and actual income
(1)     If a contractor makes a written offer to provide medical indemnity cover to a member on or after 1 January 2008:
(a)     the premium referred to in paragraph 24 (1) (a) is limited to premium that is for medical indemnity cover in respect of private medical services provided by the member; and
(b)     the actual income referred to in subsection 25 (1) is limited to billings generated by a member from the provision by the member of private medical services; and
(c)     the actual income referred to in subsection 25 (3) is limited, for the purpose of the calculation of gross indemnity costs and payment of subsidy, to the income that relates to the provision by the member of private medical services.
          Note    'Private medical services' is defined in section 52.
(2)     Where a written offer to a member referred to in subsection (1) is later varied, the day the offer is taken to have been made for the purpose of subsection (1) is the day that the written offer was made.
(3)     If a contractor does not make a written offer to provide medical indemnity cover but a contract to provide such cover is entered into on or after 1 January 2008, subsection (1) applies as if that contract had been a written offer.
[17]         Subsection 29 (1)
Omit the words
for special category members
[18]         Subsection 29 (2)
Insert after the words 'member with a MISS entitlement'
or a rural procedural general practitioner
[19]         Subsection 29 (3)
Insert after the words 'members with a MISS entitlement' each time occurring
or rural procedural general practitioners
[20]         Section 30
Insert after the words 'member with a MISS entitlement'
or a rural procedural general practitioner
[21]         Subsection 32 (2)
Omit the words
for special category members
[22]         Subsection 32 (4)
Insert after the words 'member with a MISS entitlement'
or a rural procedural general practitioner
[23]         Paragraph 42 (b)
Omit the paragraph, substitute
(b)     for a contractor to which paragraph 43 (1) (b) applies, specify an amount that the contractor estimates as the administration fee, having regard to the matters set out in subsection 43 (5).
[24]         Section 43
Delete the section, insert
(1)     The administration fee payable to a contractor for a financial year, whether or not paid proportionately over that year, is:
(a)     for a contractor whose total number of members at any time in any previous financial year exceeds 1,000 members, the proportion of the PSS Administration Fee Pool as determined under subsection (2); or
(b)     for any other contractor, the amount calculated under subsection 43 (5), irrespective of whether the number of the contractor's members increases to more than 1,000 during the financial year to which the administration fee relates.
Note   Once the number of members of a contractor reaches 1,000, the contractor comes within paragraph (1) (a) in the next financial year and remains covered by that paragraph in each subsequent financial year even if the number of members of the contractor later decreases to below 1,000.
(2)     The proportion of the PSS Administration Fee Pool for a contractor for a financial year is determined as follows:
(a)     calculate the number of the contractor's members in respect of whom a run-off cover support payment is attributable as at 31 May in the previous financial year; and
(b)     calculate the total number of all contracted insurers' members of the type referred to in paragraph (a); and
(c)     divide the amount calculated in paragraph (a) by the amount calculated in paragraph (b) and express the result as a percentage; and
(d)     multiply the percentage determined under paragraph (c) by the total amount of the PSS Administration Fee Pool.
(3)     In this section, run-off cover support payment has the same meaning as in the Medical Indemnity (Run-off Cover Support Payment) Act 2004.
(4)     The amount of the PSS Administration Fee Pool for a financial year is the total amount paid to all contractors under this Part as administration fees in the previous financial year plus an indexation amount for the current financial year, where indexation amount means an amount determined by an authorised officer having regard to indices in respect of the current financial year that are provided by the Department of Finance and Administration to the Department for the purpose of funding increases.
(5)     The administration fee payable to a contractor referred to in paragraph (1) (b) for a financial year is an amount determined by an authorised officer having regard to:
(a)     the actual cost to the contractor of meeting the obligations imposed on it by this Scheme; and
(b)     the need for the efficient and effective performance of those obligations in the interests of the parties to the PSS contract and affected medical practitioners; and
(c)     any loss caused to the contractor by the Medicare Australia CEO not complying with its obligations to the contractor under the PSS contract; and
(d)     the estimated amount provided in the contractor’s application; and
(e)     any amount set out in the PSS contract as the estimated administration fee.
(6)     An authorised officer may consult with the Medicare Australia CEO and any other relevant person or agency when calculating an amount under this Part.
(7)     An administration fee payable in accordance with this Part constitutes a payment in respect of all costs, including any expenses, disbursements, levies and taxes (including GST), incurred by the contractor in carrying out its obligations under this Scheme for the financial year to which the payment relates.
[25]         Section 48
Before the words 'authorised officer', omit 'the' and substitute 'an'
[26]         Section 52 – Deletion of definitions
Delete the following definitions:
special category calculation
special category member
transition period
[27]         Section 52 – Insertion of definitions
Insert the following definitions
gratuitous services means medical services provided free of any charge or other benefit and include without limitation good Samaritan acts or omissions, volunteer services and prescription and referral writing.
lowest base premium, in respect of a non-procedural general practitioner referred to in paragraph 15 (1) (b), means the lowest premium, including any discount but excluding any risk surcharge, within the meaning of that term in section 24, available from the contracted insurer to a non-procedural general practitioner who is in the same income band and practises in the same specialty.
private medical service, of a member, means a medical service provided by the member to a patient on a private (not public) basis and for which the member either holds medical indemnity cover (in his or her own name) with the contracted insurer or for which the member is personally liable.
rural procedural general practitioner means a member who is a procedural general practitioner practising in a rural area.
Note   Definitions are to be inserted in the appropriate alphabetical position, determined on a letter-by-letter ― see 14A of the Acts Interpretation Act 1901.
[28]         Section 52 ― Definition of 'retroactive cover'
Delete the definition, substitute
retroactive cover means, for a medical practitioner and a contracted insurer, claims-made based cover for the medical practitioner in relation to claims that may be made in respect of incidents occurring prior to the inception of the practitioner's current medical indemnity cover.
[29]         Section 52 ― Definition of 'run-off cover'
Delete the definition, substitute
run-off cover means medical indemnity cover for a medical practitioner in relation to compensation claims that may be made against the person:
(a)     after the insurer or MDO ceases to provide claims-made based cover to the person; and
(b)     in respect of acts or omissions occurring before the first contract for provision of the cover takes effect,
but does not include medical indemnity cover of the type referred to in subsections 12 (7) or (8).
Notes
1.       This Scheme amends the Premium Support Scheme 2004, as amended by the Premium Support Amendment Scheme 2005 (No. 1) and the Premium Support Amendment Scheme 2006 (No. 1).